Today’s railway: contracts and open access

Contracted operators

Franchises were effectively ended in March 2020, when the government brought all its contracted operators under Emergency Measures Agreements.

These have now been replaced in the main by National Rail Contracts, which are essentially concessions under another name. An NRC means that a private sector operator takes almost no commercial risk, while the Department for Transport collects the revenue and pays the costs. Each operator receives a management fee, which can be increased if performance targets are met.

However, four operators in England, two in Scotland and one in Wales have been renationalised. In the case of the Department for Transport, which is responsible for the operators in England, the renationalised operators come under the DfT’s Operator of Last Resort, an arrangement which was created at the start of railway privatisation in case any franchised operator failed.

LNER succeeded the failed Virgin
Trains East Coast franchise in 2018

At the start of October 2023, the nationalised operators in England were LNER, Southeastern, Northern and TransPennine Express. There were two Scottish franchises after the Scottish Government had divided the old ScotRail franchise by creating a separate contract to run Caledonian Sleeper services. Both ScotRail and Caledonian Sleeper have since been renationalised and are controlled by the Scottish Government. The single Welsh franchise, which was known officially as Wales & Borders, is now part of Transport for Wales (Trafnidiaeth Cymru) and is owned by the Welsh Government.

The remaining English operators have remained in the private sector, but they are now government contractors and have comparatively little independence.

Contractors and franchises

Open access operators

The ministers who privatised the railways in the 1990s had imagined that it would be possible to create a ‘right of access’ to the railway, meaning that any company with the appropriate safety qualifications could have run passenger trains. In practice, this was quickly seen to be unworkable, because such operators would have been able to ‘cherry-pick’ or ‘skim the cream’ from the traffic at the most lucrative times, while leaving services at less busy times of day to the franchised operators.

Open access

In practice, open access licences have been sparingly granted.

Current open access operators, who have no government contracts and take full commercial risk, are Heathrow Express, Hull Trains, Grand Central and Lumo. Eurostar is also an open access operator which uses the railway in Britain and also some other European countries. Another open access operator, Wrexham & Shropshire, proved unable to survive and ceased running in January 2011.

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